As the Kentucky legislature adjourns the first week of the 2025 session of the Kentucky General Assembly, moves have been made to lower the state income tax down to 3.5 percent.
House Bill 1 has made it out of the House and over to the Senate, where he now heads into committee for further review before going in front of the full Senate for a vote. Essentially, it would continue the incremental lowering of the income tax, down to 3.5 percent in January 2026.
When this process started, that tax was at six percent, but local legislators say they’re committed to seeing it get down to zero in the state. The reason it’s happening in stages, says Representative Myron Dossett, is because the legislation requires the revenue in the state to hit certain thresholds before it can be lowered again, to make sure it doesn’t leave the state with a revenue vacuum.
So, Representative Myron Dossett says that speculations that they’re going to raise the state sales tax is unfounded—he is against any such measure, and says he hasn’t even heard of the possibility from leadership in Frankfort.
New State Senator Craig Richardson says it’s his hope to not have to have any type of new tax as they lower in the income tax, and he thinks the worry comes from the fact that many people are beginning the conversation on what comes next, if anything.
Representative Walker Thomas says there’s no need to even consider an increase on the sales tax—that’s what the threshold triggers were for.
Opponents of the drive to lower the state income tax have argued that it takes away revenue for the state to pay for essentials without propping anything new up in its place. Either way, it’s likely that House Bill 1 will pass when the General Assembly reconvenes for the remainder of the session in February.